Visa Inc. estimates that after an unexpectedly strong start to the 2007 holiday season1, followed by a slowdown over the past few weeks, overall retail sales in the United States will recover as last-minute discounts and extended store hours attract value-conscious consumers. Compared with this point in the season last year, consumers are behind in checking off their holiday shopping lists2, but an extra shopping day this year combined with an increasingly savvy consumer creates more opportunity for a last-minute holiday sales push.
“We didn’t expect retail sales to increase as much this season as in years past due in part to the housing market downturn and elevated energy prices, but attractive Black Friday sales helped buoy November sales, which jumped by a higher than expected 5.3 percent year-over-year,”3 said Wayne Best, senior vice president of business and economic analysis for Visa Inc. “Following a relatively strong Thanksgiving weekend performance, we’re now seeing a bit of a lull due to high gas prices and increasingly savvy consumers – Americans know to hold out for deals, and we anticipate spending to increase in the final days of the shopping season as retailers respond with last-minute bargains.”
Based on a thorough analysis of marketplace data and spending on Visa-branded products, coupled with a careful review of economic indicators, Best predicts that the following three trends will help drive holiday spending for the remainder of the season:
Last-Minute Retailer Incentives
Given the success of Black Friday promotions, retailers are looking for additional incentives to bring shoppers into stores for the final shopping days. “Promotions such as one-day sales during the week and extended shopping hours will continue to be more likely to motivate holiday shoppers who seek out value this holiday season,” Best said. “Retailers are also continuing to use loyalty programs aimed at affluent customers, offering perks such as after-hours shopping times and special promotions to help boost sales.”
Value-Conscious Consumers
The unemployment rate remains steady at a low 4.7 percent4 — beyond full employment in the United States. Best predicts that the high number of Americans in the workforce, combined with their associated wage gains, will continue to translate to consumers’ ability to spend during the holidays.
Despite the tight labor market and Americans’ relative strong income growth, economic uncertainty is resulting in a value-driven consumer base as more shoppers — at all incomes levels — flock to discount stores. “Even affluent consumers are increasingly value-conscious right now, which is likely to help boost sales as retailers announce last-minute bargains,” Best said. Additionally, with online retailers’ free shipping deadlines quickly approaching, consumers will be looking to make their final Web purchases.
More Days to Shop
Following Black Friday, there are 32 days to the Christmas holiday this year. Compared with last year’s 31 shopping days, consumers have an extra 24 hours to take advantage of last-minute discounts. “With Christmas Eve falling on a Monday this year, consumers may be more inclined to hold out for that last-minute deal, which may result in a late surge in sales,” Best said.
About Visa: Visa operates the world's largest retail electronic payments network providing processing services and payment product platforms. This includes consumer credit, debit, prepaid and commercial payments, which are offered under the Visa, Visa Electron, Interlink and PLUS brands. Visa enjoys acceptance around the world and Visa/PLUS is one of the world's largest global ATM networks, offering cash access in local currency in more than 170 countries. For more information, visit www.corporate.visa.com.